Antitrust Law Daily Wrap Up, ANTITRUST NEWS: European Commission fines power exchanges €5.9 million in cartel settlement, (Mar 5, 2014)

By Linda O’Brien, J.D., LL.M.

The European Commission (EC) announced today that it has imposed fines of over €5.9 million on the two leading European spot power exchanges -EPEX Spot (“EPEX”) and Nord Pool Spot (NPS)— for agreeing not to compete for their spot electricity trading services in Europe. Power exchanges are organized markets for trading electricity. Spot trading services are trading in the short run, such as within the same day or for the next day. NPS and EPEX each received a fine reduction of 10 percent for agreeing to settle the case with the EC. Today’s decision is the eleventh settlement since the introduction of the settlement procedure for cartels in June 2008.

The exchanges activities took place in the form of discussions to establish the Internal Energy Market (IEM), an EC initiative aimed at fully integrating national electricity markets. When exploring a joint approach on the technical systems to be used for cross-border trade, EPEX and NPS also agreed not to compete with each other and to allocate European territories between them. These agreements extended beyond the legitimate purpose of the cooperation related to creating the IEM.

The anticompetitive contacts took the form of physical meetings, telephone and video calls and e-mails and lasted for at least seven months in 2011 and 2012, until the EC and the European Free Trade Association (EFTA) Surveillance Authority carried out unannounced inspections at the companies’ premises. Power exchanges play an important role in providing public price information. The EC believes it is crucial to achieve transparent and reliable electricity prices on the wholesale and retail markets.

In setting the level of fines, the EC took into account the power exchanges’ value of sales for the services concerned within the EEA, the serious nature of the infringement, the geographic scope and duration of the cartel. The fines cannot exceed 10 percent of the annual worldwide turnover of the companies before the settlement reduction. Under the Commission’s 2008 Settlement Notice, the EC reduced the fines imposed on both companies by 10 percent as they acknowledged their participation in the infringement and their liability.

In a statement, Joaquin Almunia, EC Vice President for Competition Policy, said “Power exchanges are central to an efficient functioning of electricity markets. In times when most European consumers are concerned by their rising electricity bills, I am particularly satisfied that we have brought to an end the market sharing agreement between EPEX and Nord Pool Spot.”

Abuse of dominance by power exchange. Separately, the EC adopted a decision today concerning the Romanian power exchange, S.C. OPCOM S.A. (OPCOM). The EC imposed a fine of over € 1 million on OPCOM for abusing its dominant position in the Romanian market for facilitating electricity spot trading, in breach of EU antitrust rules. The EC found that OPCOM discriminated against EU-based electricity traders from outside Romania for over five years.

News: Antitrust